Demonetisation Gives Birth to Innovative Laundering Methods

From Black Money Act and Income Disclosure Scheme to Demonetisation scheme, government has left no stone unturned to demolish parallel economy. However, hardcore tax evaders have taken this as an opportunity to come up with new and increasingly innovative ways to launder cash. Some of the methods used by such people has come into light after several raids and surveys conducted by the tax department.

A recent operation by Income Tax Investigation Directorate shed light on a syndicate which was acting as medium to convert people’s black money into white. It charged 35% commission from those seeking its service. It is interesting to note how the syndicate used RBI’s guidelines to its advantage. It operated through a network of ground level operatives (GLOs). These GLOs would withdraw new currency notes from their bank accounts as well as from the accounts of their relatives and friends. Later they would collect old notes from aggregators and deposit such notes into their accounts or in the accounts of their relatives and friends. Finally they would transfer new notes to the aggregators at a commission of 35%.

Another investigation revealed that cash was deposited into 7 accounts without the knowledge of account holder. PAN and other personal information of the person were used to create 7 different accounts which were used to launder cash worth Rs. 4.25 crores and channel the money to 8 beneficiaries. In another interesting case, a survey conducted by tax department revealed cash worth Rs. 27 lakhs which were going to be transported to Delhi in trucks carrying firecrackers.

Post demonetisation, government has witnessed surge in deposits in Pradhan Mantri Jan Dhan Yojna accounts due to which RBI stamped withdrawal limit of Rs. 10,000 on such accounts. Some private sector banks have also been found aiding money launderers in creating accounts and depositing unaccounted cash.

As the everlasting tug of war between taxman and tax evaders becomes fiercer, it will be interesting to see who will gain an upper hand in the long run.

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